Esquire Knit Composite has planned to raise Tk 1 billion by issuing preference shares to "repay bank loans and expand its business".
It has decided to issue 100 million preference shares at a face value of Tk 10 each, subject to the approval of the shareholders at the upcoming annual general meeting and consent of the Bangladesh Securities and Exchange Commission, the company said in a filing with the Dhaka Stock Exchange on Wednesday.
Preference share or preferred stock comes with dividends paid out to shareholders before common stock dividends are issued. In case, the company becomes bankrupt, preferred stock holders must be paid from the company assets before general stockholders.
Of the total amount, the company intends to use Tk 650 million for business expansion and procurement of machinery while Tk 350 million will be spent on paying off high-cost bank borrowing, said Company Secretary Md. Monir Hossain.
If the decision is implemented, the company's production capacity will increase while the cost will decline, he said.
The tenure of the preference shares will be eight years and dividend will be paid semi-annually while redemptions will be made semi-annually commencing after 18 months from the first date of the issuance.
Listed in 2019, Esquire Knit Composite, a strategic business unit of Esquire Group, raised Tk 1.5 billion from the capital market under the book building method.
The cut-off price was Tk 45 per share and individual investors received the IPO shares at Tk 40.50 each at a 10 per cent discount to the cut-off price, as per the book-building method.
Esquire Knit's consolidated revenue rose 28 per cent year-on-year to Tk 10.15 billion in the FY22. Its net profit also rose 7.33 per cent to Tk 318.67 million during the period, inspiring a 10 per cent cash dividend for general investors for the year.
However, its consolidated net profit plunged 87 per cent year-on-year to Tk 12.15 million in the first quarter of FY23 ended in September last year.
Located at Sonargaon, Narayanganj, Esquire Knit has emerged as a conglomerate having knitting, fabric dyeing and finishing facilities under one roof since its commercial launch in 2001.
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